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Business Failures World's Biggest Problem in 2019

We want to tell you last year’s Global Risks Report was published at a time of heightened global uncertainty and rising popular discontent with the existing political and economic order. The biggest problem for the global economy in 2019 won’t be the trade war between China and America. It will be enormous business failures. Perhaps bank failures, too. We highlight four concerns: (1) domestic and international political tensions, (2) cyber vulnerabilities. (3) Environmental dangers and (4) persistent inequality and unfairness. We conclude by reflecting on the increased dangers of systemic breakdown. Many citizens feel economic gains to concentrate among elites. The US-China trade war was the big problem in 2018, raising fears of de-globalization. The reason is the rise of interest rates and the end of easy money created by dominant bankers in recent years. Read below about Business Failures World’s Biggest Problem in 2019.

 

On the Supply Side

Business Failures World’s Biggest Problem in 2019:

It is expected to push the demand and the supply side of the economy to lower levels. Central banks are raising interest rates. Recently, however, things have changed. The tsunami of free money is receding. On this side, it encouraged corporations and entrepreneurs to pursue low-profit businesses opportunities. More spending fueled more investment and the creation of new businesses. More consumer debt fueled more spending. Both feed into higher economic growth, which in turn boosted income and employment.

 

Business Failures World's Biggest Problem in 2019

Risks of conflict

Business Failures World’s Biggest Problem in 2019:

Societal polarization slipped slightly in respondents’ rankings of the main underlying drivers of global risks. The United Kingdom’s political system is struggling to cope with the strains unleashed by the decision to leave the European Union. This is still most evident in the United Kingdom and the United States, the two Western countries that recorded dramatic anti-establishment democratic results in 2016. Some Clashes related to identity and community continues to drive political dislocations in many countries and is increasingly fuelling cross-border tensions. There is a strong case for arguing that the two are closely related—that economic pain has been sufficiently concentrated among groups. Debates about the populist surge of recent years tend to pit economic causes against cultural ones.

 

Business Failures World’s Biggest Problem in 2019: Cybersecurity

The bad news is attacks against businesses have almost doubled in five years, and incidents that would once have been considered extraordinary are becoming commonplace, explains the report. The respondents also point to cyber-attacks and theft of data as some of the risks most likely to happen. Some of the largest costs in 2017 related to ransomware attacks. Another growing trend is the use of cyber-attacks to target critical infrastructure and strategic industrial sectors.

 

On the Demand Side

Compounding the problem this time around is the rise of anti-globalization ideologies around the world. On the supply side, it could push low-profit business off the cliff. On this side, the end of free money will make it difficult for consumers to take on more debt. US Business failures soared to 6,000 per quarter, while bank failures reached 157. That’s what happened in 2008-9, shortly after the Federal Reserve raise interest rates and the US economy slid into a recession. Projected leisurely growth in 2019 may also fuel the rise of anti-establishment parties leading to greater risk aversion and a worsened outlook for growth.

 

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